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TMI Blog2019 (3) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance ruling for classification of goods. The applicant referred to Chapter Heading 7113 and submitted that the rate of tax applicable would be 1.5% CGST + 1.5% SGST. 2.2 It is further submitted that the applicant is dealer in such goods since 2010 and at the relevant time, the applicant had obtained determination under Section 80 of the VAT Act, 2003. It is further submitted that the learned Joint Commissioner of Commercial Tax (Legal), Gujarat State, Ahmedabad, by order dated 10.01.2011 under section 80 of the VAT Act, 2013 had determined the product as jewellery and relevant entry at the relevant time was as under - Schedule II - 13(2) Articles of jewellery made of gold or silver or both or of other precious metals (studded or not studded with precious stones or pearls whether real, artificial or cultured) Accordingly applicable rate was @ 1% vat. 2.3 It is further submitted that the Hon'ble Gujarat High Court in the case of State of Gujarat Vs. Titan Ind. Ltd., in Tax Appeal No. 46 of 2017 dated 03.02.2017 reported in (2017 GSTB - 1- GH 32) = 2017 (2) TMI 521 - GUJARAT HIGH COURT, in which the company had sold NABULA WATCH, Hon'ble Gujarat High Court confirmed the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to Chapter Note 9 of Chapter 71 of the Customs Tariff Act, 1975 and submitted that as per the said Chapter Note, articles of jewellery means small objects of personal adornment and the illustrations given in the note fully cover various articles manufactured and sold by the applicant. It is therefore submitted that all the articles of jewellery sold by the applicant fall under Chapter 7113 of the Customs Tariff Act, 1975 and accordingly fall under entry 13 of Schedule V of Notification No. 1 of 2017 and hence liable to 1.5% CGST and SGST respectively. 3.6 The applicant relied on the judgement of Hon'ble High Court of Gujarat in the case of State of Gujarat V/s. Titan Industries Ltd. [103 VST 270 (Guj.)] = 2017 (2) TMI 521 - GUJARAT HIGH COURT. The applicant also referred to determination order in its own case passed under the VAT Act, reported as Marigold Watches [2011 GSTD 3]. 3.7 The applicant submitted that common parlance test is the primary principle to be adopted for classification and referred to the judgements of Hon'ble Supreme Court in the case of Ramavatar Budhiaprasad Vs. Assistant Sales Tax Officer, Akola and another [12 STC 286 (SC)] = 1961 (3) TMI 55 - SUP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II to the Notification dated 28.6.17 as amended w.e.f. 14.11.17. 3.11 It is submitted that Note 1(b) of Chapter 91 expressly excludes watch chain, which is indicative of the fact that articles of precious metal holding watch are not covered by Chapter 91. Similarly, as watch chain is not covered by Chapter 91, various articles of jewellery specifically covered by Chapter 71 which holds the watch are not covered by Chapter 91. 3.12 The applicant referred to rules of interpretation of the First Schedule to the Customs Tariff Act, 1975 and submitted that when an article is classifiable under 2 or more headings then Rule 3(b) of the General Rules for the interpretation of the First Schedule is very relevant. Thus, if the articles sold by the applicant are considered as either jewellery or watch and hence not falling under any specific heading, the question which is required to be addressed for its classification as laid down in rule 3(b) is what is the essential characteristic of the articles sold by the applicant. It is submitted that the articles sold by the applicant are expensive not because of their superiority as time keeping devices but because of their ornamental value. The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - (i) ...... (ii) ...... (iii) "Tariff item", "sub-heading" "heading" and "Chapter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification." 6.2 Further, Hon'ble Supreme Court in the case of L.M.L. Ltd. Vs. Commissioner of Customs [Civil Appeal No. 3764 of 2003, decided on 21.09.2010 reported at 2010 (258) ELT 321 (S.C.)] = 2010 (9) TMI 12 - SUPREME COURT OF INDIA has held as follows :- "12. In Collector of Central Excise, Shillong v. Wood Crafts Products Ltd. reported in (1995) 3 SCC 454 = 1995 (3) TMI 93 - SUPREME COURT OF INDIA, it was held by this Court that as expressly stated in the statements of objects and reasons of the Central Excise Tariff Act, 1985, the Central Excise Tariffs are based on the Harmonious System of Nomenclature (HSN) and the internationally accepted nomenclature was taken into acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cious metal fall in heading 9102." 9.3 Explanatory Notes to heading 9101 of Harmonised System of Nomenclature are as follows :- "The Explanatory Note to heading 91.02 applies, mutatis mutandis, to this heading. In accordance with Note 2 to this Chapter, watches of this heading must have cases wholly of precious metal or of metal clad with precious metal. They may be set with gem stones or with natural or cultured pearls and may be fitted with a cover or have a bracelet of precious metal (gem set or not). In accordance with Note 7 to Chapter 71, the expression "metal clad with precious metal" means material made with a base of metal upon one or more surfaces of which there is affixed by soldering, brazing, welding, hot-rolling or similar mechanical means, a covering of precious metal. However, watches with case of precious metal or of metal clad with precious metal, having a steel back, fall in heading 91.02, as do watches with case of base metal inlaid with precious metal." 9.4 Explanatory Notes to heading 9102 of Harmonised System of Nomenclature inter-alia provides as follows :- "This heading covers mechanical and electrical (mostly electronic) timekeeping instruments with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appropriate heading in accordance with the description of heading and relevant Chapter Notes. 12. Rule 1 of the 'General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975' (herein after referred to as the 'Rules for Interpretation') inter-alia provides that classification shall be determined according to the terms of the headings and any relative Section or Chapter Notes. Rule 3 of the 'Rules for Interpretations', provides that when by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as provided under the said Rule 3. Sub-rule (b) of said Rule 3 provides for classification with reference to material or component which gives the item the essential character. However, as already noted, the product in question is specifically covered under heading 9101 in view of the terms of that heading read with the relevant Chapter Note. Therefore, the product is not required to be classified in accordance with Rule 3(b) of the Rules for Interpretation. 13. In respect of similar products, Hon'ble Customs, Excise and Service Tax Appellate Tribunal in case of Titan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Rule 3(b) of the interpretative rules is resorted to only if the rules preceding it do not help classify an item. Therefore, the necessity of resorting to classification with reference to material or component which gives the item its essential character is not relevant in the instant case. As per Chapter Note 1(k) to Chapter 71, that Chapter does not cover articles of Chapter 91. Therefore, a watch made of precious metal also cannot be classified under Chapter 71. The HSN explanatory notes to Chapter 91 clarify that articles of precious metals decorated with precious stones will remain classified under Chapter 91. Further, notes under heading 91.01 contain in its Note (2) the stipulation that watches of the said heading must have cases wholly of precious metals or of metal clad with precious metal. Such watches may be set with gems, pearls, and may be fitted with a cover or have a bracelet of precious metal. It is very plain that the goods in question fully satisfy the description contained in CSH 9101.00. The Commissioner has rightly relied on the explanatory notes in HSN under Chapter 91 which fully supports the above classification." 14. The judgement dated 03.02.2017 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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